Microsoft's 'Surface' — what do people think?

(1:29)

Microsoft unveiled its tablet computer Surface on June 18. Here is a sample of WSJ reporter and reader comments.

While some of the aforementioned tablets aren’t necessarily finished yet, the market is still led by Apple Inc.
AAPL, -0.87%
and the iPad. The only device to really knock out some of its dominant market share so far has been Amazon Inc.’s
AMZN, -0.11%
cheaper Kindle Fire, which has since lost some momentum that it had last December.

In April, market research firm Gartner Inc. projected that, even with the arrival of Microsoft-based devices and the anticipated international rollout of the Kindle Fire, “Apple will continue to be the market leader.”

Probably the biggest lesson Microsoft can take away from some of the mistakes of the dead and dying tablets is probably price. One of the early key attributes of the iPad — apart from its cool design and other features — was its reasonable starting price of $499. The competing tablets, based on Google Inc.’s Android, were priced far higher out of the gate, discouraging consumers who could pay less for the more popular iPad.

If Microsoft launches the Surface tablet at too high of a price, it too risks entering the tablet graveyard. And now, it’s additionally faced with Apple selling the older iPad 2 at a starting price of $399.

But so far, the vibe some analysts are getting is that Surface may start out at a higher price than the iPad. “Microsoft is trying to set the bar higher and it doesn’t want to undercut with low prices,” said Sarah Rotman Epps, a Forrester Research analyst who believes Microsoft will set higher prices initially for the Surface tablets. ”Whether that’s a strategy that will resonate with consumers remains to be seen.”

Getty Images

CEO Steve Ballmer shows the new tablet called Surface during a news conference at Milk Studios on June 18.

The only clues Microsoft has given was a vague statement in its press release that pricing will be announced closer to the availability of the Surface and that it “is expected to be competitive with comparable a ARM tablet or Intel Ultrabook class PC.”

That statement left room for a lot of speculation. Early guesses on Wall Street are pretty much all over the map. But what analysts believe will happen is at odds with what they think or hope Microsoft should do.

“The company said RT [Windows Real Time] pricing would be comparable to other ARM-[based] tablets so we hope that means the starter price would be near the iPad’s $499 level,” said Wells Fargo Securities analyst Jason Maynard, in a note.

There are some other factors at play, though, because Microsoft will be developing two different versions of its tablet, based on its plans to launch two different operating systems, Windows 8 and Windows RT. It also cannot afford to upset its computer maker partners, with which it will also be competing, and said its OEMs will have “cost and feature parity.”

Its Surface tablets based on chips using popular mobile designs from ARM Holdings PLC’s
ARMH, -1.18%
could be less expensive, while the heavier, thicker Surface based on Intel Corp.
INTC, +0.14%
chips may cost more. One analyst has some pretty high price estimates.

“We would therefore expect Surface for Windows RT in the $500 to $700 range and Surface W8 for at least $800,” said Raymond James analyst Michael Turits, in a note on Tuesday.

Others, though, believe the software behemoth needs to come in at far lower prices than that, even if it means cutting into potential profits, if it really wants to grab market share. Peter Misek, an analyst with Jefferies & Co., noted on Tuesday that “Microsoft will need to significantly undercut the iPad to be competitive.”

Shaw Wu, an analyst with Sterne Agee, said that Microsoft “may need to price aggressively, closer to Amazon or even below, to give the Surface a fair chance in the marketplace,” Wu noted. “The risk of course with this is no profitability or likely losses as we have seen with RIM’s BlackBerry PlayBook and H-P’s TouchPad.”

And even it if launches at least one model of the Surface at a very low price point, Microsoft is still seen facing an uphill battle against Apple’s competitive advantage and its supply chain prowess and buying power.

The battle between the old foes and quasi friends, Apple and Microsoft, is going to be fun to watch.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.